Virgin America Files for IPO

Virgin America, the low-cost US airline launched and partly owned by Sir Richard Branson, has filed for an initial public offering (IPO) to fund its planned expansion in a reviving market for air travel.

The company did not disclose the number of shares to be sold or the listing exchange, although its regulatory filing named Barclays and Deutsche Bank Securities as the lead underwriters for the offering.

In its registration statement filed with the US Securities and Exchange Commission (SEC), the airline said it believed there were “significant opportunities” to expand its route network across the US and Mexico and into Canada. Currently, most of its flights operate to and from its focus cities of Los Angeles and San Francisco.

It also plans to grow its presence in Dallas and expects to expand its aircraft fleet by at least 20% but said there was “significant flexibility” in the growth plan.

Although Virgin America said the offering would raise US$115m, the figure is meant only to calculate registration fees and the actual amount could be significantly higher. The airline earned US$10.5m on revenue of US$1.42bn in 2013, its first profitable year since it commenced operations in 2007.

Earlier this year Virgin America won some takeoff and landing rights at New York’s LaGuardia Airport and Ronald Reagan Washington National Airport that American Airlines gave up in return for approval of its merger with US Airways Group.

Branson, whose investment in the airline is restricted by US foreign investment rules, has a 22% stake in Virgin America through the Virgin Group and a hedge fund. He also owns a 51% stake in Virgin Atlantic, which last posted an annual profit in 2011.

Virgin America’s majority shareholder is VAI Partners, controlled by hedge fund Cyrus Capital Partners, which holds a 76.1% stake in the airline.

The news comes as US airlines report improved second-quarter earnings, helped by increased business and leisure travel as the national economy improves. American Airlines, the world’s largest carrier, announced its first cash dividend since 1980.


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